One of the hardest things about the fund-raising process for entrepreneurs is that you’re trying to raise money from people who have “asymmetric information.”
VC firms see thousands of deals and have a refined sense of how the market is valuing deals because they get price signals across all of these deals. As an entrepreneur, it can feel as intimidating as going to buy a car where the dealer knows the price of every make & model of a car and you’re guessing at how much to pay.
I thought I’d write a post about how to talk about valuation at a startup and give you some sense of what might be on the mind of the person considering funding you.
Of course, unlike cars, there is no direct comparison across each startup so these are just some general guidelines to try
Read Original : How to Talk About Valuation When a VC Asks